Previous Plain Dealer coverage

The holiday season hasn't provided a holiday from politics as partisan battles continue in Washington over the so-called fiscal cliff -- the predicament the country will face if tax cuts expire and deep spending reductions are allowed to take effect.

As Republicans and Democrats argue about their tax-and-spending priorities, Americans are hearing a lot about "entitlements" -- programs that primarily benefit retirees. Some say the government can't sustain those programs, and reforming them has to be part of the solution to the country's financial mess.

But are those programs really that bad off, and if so, why? The Plain Dealer looked at the current and projected state of Social Security, Medicare and Medicaid to address that question.

Monday's story examined Social Security. Tuesday's looked at Medicare, and Wednesday's deals with Medicaid.

WASHINGTON, D.C. — Some people think of Medicaid as a health care program for poor people.

Some think of it as a program that pays for skilled nursing home care for their parents or grandparents after savings have run out.

Both are right.

Medicaid costs are shared by the federal government and states, and costs go up when the economy sours. That would suggest that costs might actually be coming down.

But other trends dampen the outlook. One is the aging population trend, also facing Social Security and Medicare. The other is the growth of Medicaid under the Affordable Care Act, which in 2014 will push Medicaid eligibility higher, to 138 percent of the poverty level (about $32,000 a year for a family of four), in an effort to bring health coverage to more Americans. To help states adjust, the federal government will pick up the new costs in the early years.

"Medicaid costs will increase significantly as a result of these changes to eligibility criteria, due to the very large number of additional enrollees starting in 2014," the chief actuary, Richard S. Foster, said in an annual accounting to the secretary of Health and Human Services in March. He said then that Medicaid enrollment will grow by about 20 million people, reaching 85.1 million people in 2020.

That, however, was before the U. S. Supreme Court ruled in June that states, which fear expanded Medicaid will pinch their own budgets, can opt out of the expansion. It is too soon to know how many states will do that, but Ohio may be among them.

The CBO and congressional Joint Taxation Committee estimate that with fewer states participating, about 6 million fewer people than projected will participate in Medicaid nationwide. Although half of them are likely to wind up in other federal programs, this still is projected to reduce federal costs by $84 billion over 11 years compared with the earlier 2012 estimates.

Health-care economists and Democrats say critics should not look askance at Medicaid for the rising costs, because medical need, not inefficiency or waste, is driving these costs for seniors. While only about a quarter of Medicaid's 60 million enrollees are elderly or disabled, they account for about 66 percent of the program's costs.

The Congressional Research Service and the Kaiser Family Foundation, a nonpartisan policy center, note that Medicaid spending growth, measured on a per-patient basis, is not out of control when compared with other health programs.

Its average cost has grown at a rate of 6.1 percent per enrollee, lower than the growth of Medicare (6.9 percent), private health insurance (10.6 percent) and employer-sponsored insurance (12.6 percent). And total Medicaid spending in fiscal 2012 grew by a meager 2 percent, reflecting the improving economy.

It's "a very lean program by comparison," says K. J. Hertz, a senior legislative representative for AARP. "That point really needs to be understood -- that Medicaid is not the problem in and of itself."

Nevertheless, the coming wave of retirees, the likelihood of them depleting their savings and their eventual need for nursing-home care will boost the program's rolls. The need for care is not going away, whether government pays with programs that advocates say are efficient or shifts costs to seniors and the private market.

How lawmakers view these broader issues may determine how they deal with Medicaid, as well as other entitlements.

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